Ready for carbon tax? Govt wants steel firms to find out

The development comes at a time when India is exploring tariff and non-tariff measures to counter EU’s Carbon Border Adjustment Mechanism (CBAM) that proposes to tax ‘embedded carbon’ in imports of steel, aluminium, cement, hydrogen, electricity and fertilizers from 1 Jan 2026.

- Subhash Narayan , Rituraj Baruah

The steel ministry plans to write to all major steel companies with export interests to assess their preparedness for reducing their carbon footprint and for facing the green challenges emerging in global markets.

The development comes at a time when India is exploring tariff and non-tariff measures to counter EU’s Carbon Border Adjustment Mechanism (CBAM) that proposes to tax ‘embedded carbon’ in imports of steel, aluminium, cement, hydrogen, electricity and fertilizers from 1 January 2026.

Starting October, companies will have to submit carbon emission details of their exports to EU.

The steel ministry, which is in dialogue with the commerce ministry over the mechanism to calculate and price embedded carbon in the steel sector, is preparing a blueprint for green steel production, involving changes in technology and processes by steel companies.

According to a person aware of the development, the ministry will write to all steel companies that are exporting or looking to do so later this month and assess their preparedness to deal with the carbon tax measures being considered by western nations.